TCS: hurdles and new market for expansion!

With discretionary demand slowing down in the first quarter, Tata Consultancy Services (TCS) finds its earlier-stated double-digit growth target increasingly challenging this year, according to Chief Executive Officer & Managing Director K. Krithivasan. But the IT services major is eyeing newer markets and geographies to offset the slowdown in traditionally strong areas. This includes expanding operations into regions like Korea and Southern Europe and looking for deals in new verticals such as sports. In India, TCS will double down on the consulting operations and tap into opportunities in semiconductor design.

“I will never give up (on double digit growth), but is a tough ask for this year. We will focus on what we can do and not so much on things we do not control,” Krithivasan told businessline in an interview a day after following the company’s poor first quarter results announced last week.

TCS reported a 6 per cent rise in net profit in the first quarter of FY26 but 3.1 per cent decline in revenue as subdued discretionary spending and global geopolitical uncertainties led to demand contraction.

Business strategy

TCS chief is adopting a multi-pronged strategy to steer the company through a difficult market environment. In the short term, the IT major is going after quick wins and smaller deals. “We have to go after opportunities where clients can be more certain about the return on investment and where the investment required is not very high. So go for smaller projects and where the ROI could be quicker, within 2-3 quarters. Secondly, if we are winning 70 per cent of the time, we should now work on winning 80 per cent,” Krithivasan said.

In the long term, if the headwinds persist, TCS will go after newer markets — vertically and geographically. “We will work on expanding the scope of services offered, verticals and geographies. You need to find the white spaces to sustain overall growth,” the CEO said.

New market

“From a geography’s perspective, Southern Europe could be an opportunity for us, but our current delivery model may not be most appropriate for Southern Europe. We need to have a more localised delivery there. We also need to expand in geographies like Korea, where we are not present, but demand is good, including Asia Pacific. In terms of verticals, there are certain verticals where we do not have a big presence like sports which is a big industry,” he said. In a post-results interaction with the media, Krithivasan had said the company is seeing tailwinds in ASEAN countries, with plans to look at Philippines and Indonesia as well.

TCS chief said he stands by his earlier statement about FY26 being a better year than FY25 in terms of international revenue, provided the company can get even 1-2 per cent growth in coming quarters. The Hindu BusinessLine